Pitch Deck Teardown: Astek Diagnostics’s $2M seed deck

Astek Diagnostics closed a $2 million spherical for its urine diagnostics system, even though elevating cash for medtech isn’t for the faint of coronary heart. The corporate’s deck has some great things in it and could possibly be a deep supply for issues we are able to study from, too.

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Slides on this deck

Astek Diagnostics has a reasonably beefy 22-slide deck that splits quite a lot of the narrative over a number of slides. In some elements, the deck is complete and spectacular, however it additionally comes throughout as fairly defensive and barely dated, though this fundraising spherical closed lately. Among the slides have been frivolously redacted.

1. Cowl slide
2. Imaginative and prescient slide
3. Platform slide
4. Strategy slide (Half 1)
5. Strategy slide (Half 2)
6. Present focus slide (Half 1)
7. Present focus slide (Half 2)
8. Answer slide
9. The way it works slide (Half 1)
10.  The way it works slide (Half 2)
11.  Expertise slide
12.  Workforce slide
13.  Advisory board slide
14.  Expertise validation testing
15.  IP overview slide
16.  Firm validation slide
17.  Firm timeline slide
18.  Funding phrases slide
19.  Business and exit technique
20.  Comparable transactions slide
21.  Govt abstract
22.  Closing slide

Three issues to like about Astek Diagnostics’ pitch deck

The place the AD pitch deck is sweet, it’s nice: complete, well-researched and well-designed. Slide 6 — the issue assertion — is a superb instance of all three coming into play.

A complete drawback assertion

[Slide 6] An incredible, complete drawback assertion. Picture Credit: Astek Diagnostics

Explaining the issue in a pitch deck is essential as a result of it lays the muse for individuals to know the need and relevance of your startup. This part ought to captivate the viewers by highlighting a niche or inefficiency out there that the corporate goals to deal with. It units the context for all the presentation, permitting buyers to know the magnitude and urgency of the difficulty at hand. Higher nonetheless, explaining the issue successfully helps to validate the market demand for a services or products.

On this slide, Astek takes the chance to current knowledge and insights that again up its declare, thereby reinforcing the potential for progress and success. This part is a startup’s first step in constructing a compelling narrative that aligns its mission with the pursuits and funding targets of would-be buyers.

On this slide, Astek paints an impactful image: large quantities of hospitalizations, pointless therapies, issues with velocity and accuracy. Remedy these issues, this slide suggests, and virtually 70,000 lives per 12 months will be saved.

One other factor this slide does effectively. It describes the issue, however what’s actually going to make buyers lean ahead is the immense proportion of the issue: 8.1 million hospitalizations signifies that there’s a really formidable market measurement at play right here.

Strong defendability

In biotech, an organization is barely as beneficial as the flexibility to guard it, and having a terrific moat is a key a part of constructing a startup for the ages. The truth that the corporate is considering IP safety is reassuring, though I did have some questions on what every of those truly imply.

[Slide 15] The authorized moat round Astek is off to an excellent begin. Picture Credit: Astek Diagnostics

One query I’ve right here is why the Take a look at Algorithm patent is proven with a publication quantity relatively than the patent quantity; the patent (US11,788,962) was granted in October 2023. The second IP entry — the Fluidic Cartridge patent — is marked as pending, however it’s available to the public.

The third one had me flummoxed, so I checked with the team at Run8 Patent Group. They defined that that quantity is neither a patent nor a publication quantity: It’s a provisional patent quantity. We weren’t capable of inform whether or not the patent was transformed to a non-provisional patent, however on the very least, the terminology is complicated right here.

The ultimate entry on this listing — for a Speedy Cartridge Modification — can also be complicated. It seems that’s a regulation agency docket quantity, which isn’t a lot of an IP safety, and my pleasant patent lawyer pals inform me that merely saying “filing in progress” might have been clearer and doubtlessly a extra trustworthy description of what’s occurring right here.

Straightforward to know (however …)

In slides 9 and 10, the corporate makes it very straightforward to know how the system works:

[Slide 9] – The way it works, half 1. Picture Credit: Astek Diagnostics.

[Slide 10] – The way it works, half 2. Picture Credit: Astek Diagnostics.

These two slides do an excellent job explaining how a person would use the product. Insert pattern, micro organism are captured, then examined, then you possibly can learn what the machine discovered. From a gross sales perspective — if I have been a purchaser of one among these machines — that’s a terrific top-level view over how a person would use the machine.

However, from the attitude of a shopper, that is how I’d count on a machine like this to work. If I, a non-medically-trained particular person, have been to stroll as much as this machine, I feel I may use it. the expectation of person expertise is so excessive now, that this isn’t an innovation: That is how issues ought to be. After all, in medical gadgets, person expertise is typically not a excessive precedence, and maybe the convenience of use is a promoting level for the machine, however the way in which these slides are projected, I type of go “Yes, and so what?”

What I’d actually like to have seen right here is context. If all the opposite machines are a lot tougher to make use of, inform that story. If the machine is manner quicker, present that comparability. If there’s a main expertise breakthrough, that is what I’d be interested in as an investor.

The product slides shouldn’t present how one can hit the minimal viable person expertise. It’s higher to elucidate what it’s concerning the product that makes it particular, defendable and price investing in.

Three issues that Astek Diagnostics may have improved

There have been quite a lot of potential studying alternatives — many greater than I’ve time or area to enter on this pitch deck teardown, however let’s select some takeaways:

Inform the total crew story

The crew slide has each an excessive amount of and too little data on it.

[Slide 12] Teeming with crew members. Picture Credit: Astek Diagnostics

The aim of a crew slide is to inform the story of why a crew is uniquely positioned to construct this particular firm. As an investor, I don’t notably care about engineers or laptop scientists. The crew slide is for highlighting the founding crew and senior management, the parents which are trusted to hold this firm by means of the following few rounds of funding and product improvement. This slide wants extra context to be helpful.

Astek does get partial credit score for together with LinkedIn hyperlinks to every of the crew members, however a short description below every title can be simpler.

For the reason that firm put hyperlinks to the entire crew’s LinkedIn profiles, I went seeking to see what I may discover — and I discovered some yellow flags. Kevin is listed as a co-founder, not as CTO on LinkedIn. His profile reads that he’s “a versatile full stack developer with a background in Chemical Engineering. My expertise lies in developing web-based applications.” In order that’s nice and all, however {hardware} is tough, and medical gadgets are extraordinarily specialised. Having a CTO that appears to don’t have any startup or {hardware} expertise may trigger buyers to ask some questions.

Rick is listed as the corporate’s CFO — it’s complicated why an organization elevating $2 million would even want a CFO — however he doesn’t list Astek Diagnostics on his LinkedIn in any respect.

On the slide, Scott is listed as the corporate’s chief industrial officer — once more, a wierd position for an organization that doesn’t have a product in market but — however he, too, doesn’t have Astek Diagnostic listed on his LinkedIn. On the brilliant aspect, he does seem to have related expertise from Particular Diagnostics because the CCO and as a board member of LEX Diagnostics.

In a nutshell, ensure that no matter data you embrace in your slides matches with public data that’s accessible. If not, prepare for some prickly questions from buyers.

Let’s discuss concerning the funding spherical …

[Slide 17] That’s quite a lot of redacted knowledge. Picture Credit: Astek Diagnostics

The corporate has one thing occurring on its timeline, displaying three rounds of funding, all of them redacted. Placing apart for a second that I’ve by no means heard of a “pre-Series A” spherical, this, too, raises some flags.

The irony, after all, is that quite a lot of this data is offered by means of different knowledge sources. When buyers consider whether or not to speak to a startup, they use no matter data is offered to see the standing of the corporate. On this case, I seemed up the corporate on PitchBook and Crunchbase.

Crunchbase “knows” about three rounds of funding. Picture Credit: Crunchbase

Crunchbase tracked a $125,000 pre-seed spherical, a $256,000 grant led by the NSF (which turns out to be $275,000) and a $2 million seed round led by Wexford SciTech Enterprise Fund, which was reported in June 2023.

PitchBook has a bunch extra data:

PitchBook reveals an enormous quantity of details about firm financials in its database. Picture Credit: PitchBook

All of that’s to say that I’m not fully positive why the corporate determined to redact this a part of the pitch deck, for the reason that data is so simply gathered from public sources.

What worries me extra, nonetheless, is the following slide:

[Slide 18] This slide will not be solely superfluous, it’s doubtlessly a crimson flag. Picture Credit: Astek Diagnostics

There are quite a lot of issues to fret about on this slide: Elevating an quantity to “get to Series A Target Milestones” helps reply why the corporate wrote “pre-Series A” within the earlier slides: It’s a bridge spherical. That would imply two issues:

• The corporate wasn’t clear on what it wanted to do to have the ability to increase a Sequence A.
• The corporate did not hit the targets for its Sequence A.

Within the case of the primary choice, that implies that the founders didn’t have an excellent roadmap for what it wanted to perform in an effort to increase its subsequent spherical. That’s a crimson flag: It’s essential to have a agency set of targets, making certain that the corporate has a transparent path to hitting its milestones and having the ability to increase its subsequent spherical.

The opposite various is that the corporate did have a transparent set of targets, however it did not hit them. That occurs on a regular basis, and there’s no disgrace in that. Nonetheless, this deck makes the issue worse: It doesn’t clearly define what the corporate thinks the “Series A Target Milestones” are, and nowhere within the deck does it clarify what the milestones are, or what it thinks it must do in an effort to hit these milestones.

The ultimate crimson flag right here is that the corporate is attempting to pre-negotiate the deal: I respect that the founders have an opinion on what they suppose the cap and low cost are, however they don’t get to set these; the lead investor does. It’s attainable, after all, that this deck was up to date after the corporate already had a term-sheet in hand, but when that isn’t the case, this slide doesn’t come throughout as founders who’re skilled within the fundraising course of.

Many of the VC trade has stopped utilizing convertible notes nowadays, utilizing Y Combinator’s post-money SAFEs as a substitute. The additional bizarre factor right here is that Astek Diagnostics is, in fact, a Y Combinator alumnus from the accelerator’s S21 batch. It’s complicated why the corporate would go together with one thing apart from the usual funding phrases.

The straightforward factor can be to simply do away with this slide altogether. When elevating a certain quantity, the phrases are at all times up for negotiation and can depend upon which manner the VC wind is blowing in that individual second.

Eliminate the “exit” slide

Subtle buyers are aware of comparable exits within the area they’re investing in. A startup’s mission is to construct a particularly beneficial firm. As quickly as founders begin speaking about exits, they’re arguing against themselves.

Amazingly, Astek Diagnostics included not one, however two exit technique slides:

[Slide 19] Exit technique, half 1. Picture Credit: Astek Diagnostics

[Slide 20] Exit technique, half 2. Picture Credit: Astek Diagnostics

This exit technique slide strikes me as spectacularly defensive, along with sending the mistaken sign. Belief high-quality buyers to know their markets. Founders ought to clarify how they’re going to construct a multibillion-dollar firm and fear about M&A or IPO one other time.

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